Name that swoon

Corporate branding of sports stadiums gets sacked in sour economy

SAN FRANCISCO (MarketWatch) -- For the sports purists who nearly choked on their sauerkraut and grilled onions when San Francisco's Candlestick Park was draped in the 3Com brand back in 1995, the nation's financial crisis could carry a whiff of sweet revenge.

With ad budgets tightening across the U.S., the current crop of brand-less venues looking to cash in on their naming rights might have to wait, perhaps a long time, for the economy to thaw. And that's just fine with those ruing the day Jack Murphy turned Qualcomm in San Diego.

Still, despite backlash from Capitol Hill, fans and victims of the bank's failures, it looks like the New York Mets home will carry the Citigroup brand after a 20-year, $400 million deal, the most lucrative ever, was struck during headier times back in 2006.

The fact that Citigroup
C, -1.20%
will spend that kind of cash on such a marketing move while the company is shedding tens of thousands of jobs and being kept alive on the taxpayers' dime hasn't sat too well with at least two guys in seats of power.

Congressmen Dennis Kucinich, D-Ohio, and Ted Poe, R-Texas, teamed up last week in a letter to Treasury Secretary Timothy Geithner asking that he demand the financial-services giant back out of the deal. While some see naming the stadium as an opulent waste, totally out of touch with the times, others say it might just be smart business.

Andrew Zimbalist, professor at Smith College, is in the latter camp, saying those railing against Citigroup for inking the deal miss the point.

"When a company decides to do this, whether it's Citibank or someone else, it's because they think the exposure they get from that affiliation is worth it in terms of the business it will generate," he said. "The notion that they shouldn't be allowed to do this because they got money from the U.S. government is a non-sequitur."

Besides, Citigroup isn't the only government-backed company paying big bucks for stadium naming rights. Bank of America Corp.
BAC, -0.47%
which was also handed $45 billion in taxpayer funding, has it's name emblazoned on the Carolina Panthers' stadium in Charlotte, N.C., through 2024. The price: $7 million dollars a year.

There are several other banks receiving federal help that risk closer scrutiny for their sponsorship deals, as well, including PNC Financial Services
PNC, -0.49%
with its yard in Pittsburgh, and Chase Field in Phoenix, home to the Arizona Diamondbacks.

"I can understand, emotionally, questioning if it makes sense," Zimbalist said. "But I'd be a lot more worried about executive bonuses than how they conduct their public relations."

The phenomenon has also visited distant shores. American International Group Inc.
AIG, -0.06%
another beneficiary of a government bailout, chose to drop its sponsorship of top-ranked English soccer team Manchester United, a deal that was costing the insurance giant $20 million a year.

Demand dries up

Citigroup aside, demand from big corporations for naming rights appears to be dying down as executives reassess their priorities in the face of the deteriorating economy.

Take the Dallas Cowboys' new stadium, for example. Owner Jerry Jones is surely holding out for an historic payday, but he admits that it is no easy task in this climate.

"It would be naive to think that our economy isn't impacting commitments," Jones told the Dallas Morning News late last year.

A few years back, high-profile sponsors would have been tripping over themselves to slap their name on the Arlington venue, one of the biggest and most expensive football stadiums ever built. Not these days.

"We're seeing much more reluctance from companies to sign new contracts and that will probably continue," Zimbalist said. "But getting out of existing contracts usually requires a buyout and, depending on the explicit circumstances, might not pay off for the company."

In other words, while we might see fewer new naming-rights deals in the coming months and years with cash in short supply, we're probably stuck with names like Quicken Loans Arena and Minute Maid Park at least until the contracts expire, or the sponsor goes bust.

"Most of the major entitlement deals are extremely long in duration and will likely remain in place, provided those companies don't suffer catastrophic, company-threatening losses," said Eric Wright of Joyce Julius & Associates, a research firm that measures and evaluates the impact of corporate sponsorships.

That's not a problem for a company like H.J. Heinz
HNZ
for instance. The ketchup giant is paying $57 million to have its name on Heinz Field, home of the Super Bowl champion Pittsburgh Steelers, and so far it's been a perfect match, according to Heinz Chairman and CEO William Johnson

"The naming rights to Heinz Field have been a great deal for Heinz," he said. "The media impressions we have received due to two world championships and four title games have more than paid for the naming rights program already."

Stock woes and the name game

But in many cases, it's difficult to assess whether it ends up being a worthwhile expenditure. If share price is any indication, paying lots of money to see their names in lights has done little to help several prominent, and some not so prominent, companies thrive.

There are the obvious cases, like Enron Field and Adelphia Coliseum, though using their marketing dollars for naming rights was the least of these now defunct companies' concerns.

Then there's the parade of Internet sponsorship busts such as CMGI Field, where the New England Patriots' current run began, and PSINet Stadium, home to the then-Super Bowl champion Baltimore Ravens.

These days, there are plenty of others notable companies, with their stock price in tatters and losses mounting, that have managed to keep their name plastered on stadiums.

Ford Motor Co.
F, -0.98%
for instance, forked over $40 million for the rights to Ford Field in Detroit, and while the ailing automaker has yet to sidle up to the federal cash trough like its domestic rivals, it very well might end up there if it keeps bleeding cash.

As for the stock, it's down about 80% since the stadium opened in 2002, which happens to accurately reflect what's transpired on the field with the lowly Detroit Lions.

The struggling airline sector has traditionally been active in the naming rights game, though the Meadowlands' Continental Airlines Arena is now called the Izod Center, and the Delta Center in Utah has now taken on the not-so-catchy EnergySolutions Arena name.

Tech companies, such as Oracle
ORCL, -0.66%
and Hewlett Packard
HPQ, -1.55%
have been well represented over the years, but several of these names have dropped off, particularly the Internet brands which soared in popularity a decade ago.

Perhaps this sobering economic reality will put an end to, or at least stall, the trend that has changed the face of some of our hallowed sporting grounds in recent years. Sports fans across the country may be losing their jobs, their savings and their homes, but it looks as if they'll still have their Yankee Stadiums and Lambeau Fields.

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